Target looking ahead
Target Corp.’s fourth-quarter earnings of $520 million were down 46 percent from the year-ago period. The big earnings dip was attributed to its rocky expansion into Canada and the massive data breach revealed in December.
Yet investors found some positives in the report, and the stock closed up 7 percent the day earnings were announced. Wells Fargo analyst Matt Nemer sees a “glass half full” picture emerging: “We believe the company’s troubles with the credit breach, Canada expansion, and U.S. market share pressure are well appreciated, and are reflected in the stock.” Nemer has an “outperform” rating on Target.
Best Buy Battles costs
Best Buy’s year-end earnings showed progress in its “Renew Blue” strategy that includes aggressive cost-cutting. Last year it cut $765 million from its operations.
Last week it also said that as many as 2,000 store managers would be laid off in its next line of cuts. Most analysts see the expense and job cuts as a way to remain cost-competitive with rivals.
Deutsche Bank analyst Mike Baker wrote: “To us the key to BBY’s success is its ability to cut costs in order to fund its lower gross margin to stay competitive with Amazon.”